China-based telecoms equipment and device vendor ZTE reported solid financial results for 2017, with strong revenue growth across its three divisions and near double-digit international growth.
The company’s net profit rose 294 per cent year-over-year to CNY4.57 billion ($721 million), while operating revenue grew 7.5 per cent to CNY108.8 billion. The numbers were almost identical to those issued in an earnings forecast in early February.
ZTE chairman Yin Yimin said in a statement: “The group is set to welcome new opportunities for development, given rapid growth in the volume of data flows. Specifically, such opportunities will be represented by an accelerated process of 5G commercialisation underpinned by ongoing upgrades in network infrastructure; robust demand for smart terminals; and an onrush of new technologies and models, with AI, IoT and smart home, among others, providing new growth niches.”
During the year, ZTE said it continued to enhance its in-house control system by establishing and improving operation mechanisms and processes, and strengthening accountability to ensure the healthy operation of the company. In March 2017 ZTE reached a settlement with the US government and agreed to pay a CNY6.8 billion penalty after admitting violating US trade sanctions.
In the domestic consumer market, the company plans to significantly increase its investment in the open channel market, procure top-level designs, remodel its domestic brands and make further inroads in the carrier market.
Revenue in China increased 5.8 per cent to CNY62 billion in 2017, accounting for 56.9 per cent of ZTE’s total compared with 57.8 per cent in 2016. Revenue from international markets rose 9.8 per cent to CNY46.9 billion in 2017.
Europe, Americas and Oceania was the fastest growing region, with revenue up 22 per cent year-on-year to CNY27.3 billion and revenue in Asia increased 8.4 per cent to CNY15.8 billion. Sales in Africa plunged 34.5 per cent to CNY3.76 billion.
Carrier networks revenue grew 8.3 per cent to CNY63.8 billion, representing 58.6 per cent of turnover (little changed from a year ago); consumer business revenue rose 5.2 per cent to CNY35.2 billion; and government and corporate business increased 10.4 per cent to CNY9.83 billion.
R&D investment in 2017 increased 10.9 per cent to CNY13 billion, or 11.9 per cent of revenue, up from 11.5 per cent in 2016.